Arvind Panagariya Appointed Chairman of 16th Finance Commission by Central Government

The Indian government has entrusted renowned economist Arvind Panagariya with the crucial task of chairing the 16th Finance Commission. This appointment marks a significant step in determining how resources will be allocated between the central government and states for the five-year period starting April 1, 2026.

Panagariya, a professor at Columbia University and former NITI Aayog vice-chairman, brings a wealth of experience and expertise to this critical role. He will head a team tasked with tackling vital issues like:

• Tax Revenue Sharing: Defining the distribution of net proceeds from central taxes between the Union and states, a complex calculation that impacts development across the country.

• Grants-in-Aid: Establishing principles for grants provided by the central government to support state finances and specific initiatives like Panchayats and Municipalities.

• Disaster Management Funding: Reviewing and recommending improvements to the current system of financing disaster preparedness and response efforts.

Commission's Tenure and Responsibilities

The notification outlines the tenure of the Chairman and members of the Commission, spanning until the submission of the report or October 31, 2025, covering crucial areas such as tax proceeds distribution between Union and States, principles governing grants-in-aid, and measures to supplement State funds for Panchayats and Municipalities.

Scope of Commission's Recommendations

The Commission is tasked with making recommendations on the distribution of tax proceeds, principles guiding grants-in-aid to States, and measures to strengthen State funds for local governing bodies, aligning with the provisions specified in the Constitution of India.

Reviewing Disaster Management Financing

Notably, the Commission's mandate includes a review of the financing arrangements for Disaster Management initiatives under the Disaster Management Act, 2005, emphasizing the importance of adequate funding for such critical initiatives.

Report Submission and Financial Timeline

As per the notification, the Commission is expected to present its comprehensive report by October 31, 2025, encompassing a five-year period from April 1, 2026, elucidating crucial financial strategies and allocations.

Prime Minister Modi's Appreciation

Highlighting Arvind Panagariya's contributions, Prime Minister Narendra Modi acknowledged his pivotal role in shaping the NITI Aayog, expressing gratitude for Panagariya's dedication and service.

Arvind Panagariya's Contributions

Recognizing Panagariya's efforts, Prime Minister Modi praised his instrumental role in transforming the NITI Aayog and fostering significant changes in India's planning and developmental landscape.

Ritvik Ranjanam Pandey's Profile

Ritvik Ranjanam Pandey, a Karnataka Cadre IAS officer, assumes the role of OSD in the Department of Economic Affairs, adding depth and expertise to the 16th Finance Commission.

Arvind Panagariya’s Background and achievements

Arvind Panagariya: A Life Dedicated to Economics and Policy

Arvind Panagariya, the newly appointed Chairman of the 16th Finance Commission, is a renowned economist with a distinguished career spanning academia, government, and international organizations. His life and work illuminate a deep commitment to understanding and shaping economic development, both in India and on a global scale.

Early Life and Academic Pursuits of Arvind Panagariya :

• Born in 1952 in Rajasthan, India, Panagariya pursued his higher education in the US, earning a Ph.D. in Economics from Cornell University.

• He built a prestigious academic career, teaching at renowned institutions like Columbia University and the University of Maryland, College Park.

• His research focused on economic development, trade, and agriculture, with groundbreaking contributions on topics like imperfect competition, microeconomic reforms, and global trade negotiations.

Shaping Policy in India:

• In 2015, Panagariya returned to India to serve as the first vice-chairman of NITI Aayog, the government's premier think tank for economic policy and planning.

• His tenure saw NITI Aayog evolve into a more dynamic and responsive organization, focusing on evidence-based policymaking and fostering cooperative federalism between the central and state governments.

• He played a key role in initiatives like the "Make in India" program and the Goods and Services Tax (GST) implementation, aiming to boost economic growth and improve the business environment.

Global Impact and Recognition of Arvind Panagariya:

• Panagariya's expertise extended beyond India's borders. He served as Chief Economist of the Asian Development Bank, advising on regional economic challenges and development strategies.

• He held prestigious positions like India's G20 Sherpa, representing the country in global economic governance discussions.

• His insightful commentary and publications continue to influence debates on international trade, development cooperation, and global economic architecture.

Looking Ahead:

• Panagariya's appointment as Chairman of the 16th Finance Commission signals the government's trust in his ability to navigate complex fiscal issues and steer India's economic future.

• The Commission's recommendations will significantly impact resource allocation between the Union and states, influencing regional development, infrastructure investment, and social welfare programs.

• Panagariya's experience, analytical skills, and commitment to federalism are crucial assets in tackling these challenges and shaping a more equitable and prosperous future for India.